By
Lyn Knox |
In 2004, Portland, took a bold step to reduce poverty in its urban neighborhoods. After years of funding community-based organizations to help a lot of people a little bit, the city's Bureau of Housing and Community Development (BHCD) believed it could be more effective by pursuing a focused strategy founded on best practices.
From that belief, Portland launched its Economic Opportunity Initiative in 2004, focusing community development block grant (CDBG) funds on increasing the income of low-income individuals and families. The initiative is a citywide poverty reduction program with a goal of increasing the incomes and assets of low-income residents by a minimum of 25 percent within three years.
Two factors led BHCD to transition from revitalization to income generation as a poverty-reduction strategy-changes in the community and in the city's strategic planning process.
In the late 1990s, Portland experienced a boom. Portland's urban core was revitalized. However, as revitalization and gentrification occurred, low-income people-once concentrated in the inner city-dispersed. Despite the boom, Portland's poverty rate remained constant. Fifty thousand households were living in poverty.
As the Portland landscape changed, BHCD undertook a strategic planning process that included conducting focus groups and meeting with key stakeholders. BHCD responded to the strong messages it received:
Other economic development efforts had a trickle-down approach for years (tax incentives, physical revitalization, tax reform, regional assistance to lure companies), and it hadn't worked for low-income residents. BHCD made the decision to change to a bottom-up approach.
BHCD identified best practices from smaller projects throughout the country and implemented them on a citywide scale. Now it invests in a coordinated portfolio of more than 30 projects incorporating these best practices as a foundation:
Portland moved swiftly to change the way scarce financial resources were invested in the city's people. By creating a pool of federal, regional and local funds, including matching grants from the United Way, BHCD provides financial resources to organizations trying to expand successful projects that reduce poverty. BHCD used the scale of the initiative to get additional resources and to develop leverage. The results? Year 1: 19 projects with $2.1 million in CDBG and $650,000 in city general funds; Year 2: 30 projects with $2.5 million in CDBG and $650,000 in city general funds; Year 3: 34 projects with $2.3 million in CDBG and $1.26 million in city general funds.
The Economic Opportunity Initiative has developed an array of leveraged resources for participants:
At the end of 2006, there were 1,865 participants in the various projects (389 microenterprises and 1,476 workers on the job or in training). As places become available, new participants are enrolled. By July 2007, the number was expected to exceed 2,000. Seventy-five percent of participants had household incomes at or below 30 percent of the median family income at enrollment. The others were at or below 50 percent.
The cost per participant ranges anywhere from $1,000 to $10,000 per year. The average cost per participant is $5,500 in Year 1; $1,000 in Year 2; and $1,000 in Year 3.
In comparison, the average annualized income gain of workforce participants at six months after placement is $15,059, far exceeding the cost of the program. In addition, four times the number of workers now have employer-paid health insurance as a result of being placed in jobs.
For existing businesses, revenues have increased an average of 267 percent over two years of participation. Start-up business revenue at two years is 30 percent above the national average of $34,301 for comparable three-year businesses.
As Portland continues to transform the way it does business, there are many cities nationwide that can learn from their experiences.
FedCommunities.org is a portal to community development resources from all 12 Federal Reserve Banks and the Federal Reserve Board of Governors.
